Optimism price could suffer a correction as on-chain metrics turn bearish
- Optimism on-chain metrics flashed bearish signals while OP price climbed to $3.61 on Sunday.
- OP whale transactions coincided with network realized profits, a sign of profit taking by large wallet investors.
- OP price is likely to correct after yielding nearly 65% weekly gains for holders.
Optimism, a low-cost Ethereum Layer 2 chain has offered nearly 4% daily and 65% weekly gains to holders. OP price is $3.61 at the time of writing, as the Layer 2 token climbs despite bearish on-chain metrics.
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Optimism on-chain metrics are bearish
Optimism chain’s large wallet transactions valued at $100,000 and higher increased between December 3 and 23, as seen in the chart below. The spike in whale transactions coincides with the Network Realized Profit/Loss spikes. This indicates that large wallet investors are taking profits as OP price rallies.
Profit-taking typically precedes a correction in an asset and OP price could decline in response to whales realizing their gains in large numbers.
 [13.35.38, 24 Dec, 2023]-638390038520755505.png)
Whale transactions and Network Realized Profit/Loss. Source: Santiment
The MVRV Market Value to Realized Value ratio on a 30-day timeframe has climbed to 66.17% as seen in the Santiment chart below. Typically, everytime the MVRV metric hits a local peak, there is a corresponding correction in price and the current level is the highest in the past six months.
It is likely that OP is poised for a correction in the short term.
 [13.37.06, 24 Dec, 2023]-638390038805120006.png)
MVRV Ratio and price. Source: Santiment
Another key on-chain metric, Network Growth reveals a bearish divergence in OP. Despite OP price growth, Network Growth did not increase, it remained well below the average level throughout December.
 [14.04.44, 24 Dec, 2023]-638390039077617210.png)
Network Growth. Source: Santiment
Author
Ekta Mourya
FXStreet
Ekta Mourya has extensive experience in fundamental and on-chain analysis, particularly focused on impact of macroeconomics and central bank policies on cryptocurrencies.
